Johannesburg - The rand was pressured by weak
commodity prices in midday trade on Tuesday as weaker-than-expected US
March non-farm payrolls released on Friday had led to investors marking
down global economic growth.
"We are feeling the after-effects of the poor US jobs data.
This is affecting all commodity currencies, not just the rand," a local
At 12:15 local time, the rand was bid at R7.9442 to the dollar
from its overnight close of R7.8805. It was bid at R10.3757 to the euro
from R10.3315 before, and at R12.5617 against sterling from R12.5290
The euro was bid at $1.3064 from Monday's close of $1.3111.
RMB analysts noted in a morning report that Friday's
well-below-consensus 120,000 increase in US nonfarm employment left the
question of whether the US was in a sustainable recovery unanswered.
"Markets have swung back to expecting QE3, this is even after
the Fed minutes last Tuesday suggested no such thing. We also lack
clarity over the Chinese economy: the surprising jump of inflation to
3.6% in March suggests limited scope for aggressive monetary easing and
therefore a higher risk of a hard landing," they wrote.
Against this backdrop, the rand experienced its worst weekly
performance this year. Losses have been most aggressive on the dollar
cross, with US$/ZAR rising to a high of 7.90 over the long weekend, but
EUR/ZAR pushing into the 10.30s and GBP/ZAR into the 12.50s.
Meanwhile Dow Jones Newswires reported the dollar fell against
the yen during Asian trading on Tuesday after the Bank of Japan kept
its monetary policy on hold following its two-day policy board meeting.
While the decision was in line with market expectations,
analysts said investors hoping for some additional easing measures
unwound their yen-short positions.
China, meanwhile, posted a $5.35bn trade surplus in
March from a $31.48 billion deficit in February. While the figures were
above market expectations, Masashi Murata, senior currency strategist at
Brown Brothers Harriman in Tokyo said a weaker than expected increase
in imports were a sign for concern, especially for commodity currencies
such as the Australian dollar and New Zealand dollar.
China's imports rose 5.3% on year compared with a 39.6% rise
in February, while exports rose 8.9% year on year from 18.4% in
Earlier in the day, US Federal Reserve Chairman Ben Bernanke
said in prepared remarks that more regulatory action may be needed to
safeguard the money-market mutual fund industry, but refrained from
commenting on the possibility of further Fed easing. While market
reactions were minimal, analysts said the dollar was nevertheless weaker
following last Friday's worse-than-expected jobs data.